(FINNBAY) – Tampere, 9 August 2013. Finnish Ministries have released their budget plans separately according to the guidelines provided by the Minister of Finance, Jutta Urpilainen yesterday. Due to budget cuts on several sections, Finnish President’s salary is reduced by approximately 20%.

Sauli Niinistö. Photo: Office of the President of the Republic of Finland

Tax revenue of the Finnish government is estimated to increase 1,5 percent in 2014, which is more than half a billion, compared to the budget of 2013.

The president’s salary is decreased from 160,000 to 126,000 euros but members of the parliament’s appropriation grow every year.

A raise in alcohol, tobacco, and soft drink taxation is estimated in total to increase state’s tax revenue by 230 million euros. An increase in fuel and electricity taxes estimated to bring an addition of 195 million euros.

A reform on taxation of capital gain will be implemented by reducing progression limit from 50 000 to 40 000, where 32% of the income above will be taxed.

Dividend –and corporate tax reform will be made in 2014, which supports economic growth, employment and entrepreneurship. To balance public finances, the government wants to focus on environmental and health-based taxation, rather than taxing work and entrepreneurship. To increase equity, the government will ease taxes on workers with low-income, and increase progression on taxation of capital gain.

In addition, there will be cuts in tax subsidies to widen the tax base. The government estimates the net effect of these measures taken in 2014 to decrease tax revenue by 270 million euros.

However, the changes made in corporate taxation will have an effect in the long term, and will be seen as the economy starts to recover. As many companies have losses from the previous years, their taxable income is reduced in the few coming years. Therefore, the positive effect of corporate tax reforms on production will be seen as the economy recovers.